Ionis: Catalyst Pending, Ignore The Drop

Summary

Misguided speculation in Ionis felled the stock 10% due to a clinical hold on a Phase 3 trial that had not even begun.

Ionis has promised to reveal more information about its Phase 2 Nusinersen open label study at the AAN meeting between April 16-21.

Analysts have been very curious about early approval because the results so far have been wonderful.

Ionis-TTRRs Phase 3 trial in FAP has been going on for 3 years, the hold is on a proposed Phase 3 trial in FAC - a different indication.

Ionis says that FAP and FAC are handled by different FDA departments.

Introduction

Investors continue to treat Ionis Pharmaceuticals (NASDAQ:IONS) just like any other biotech. They are unable to differentiate between a biotech that has its own organic drug discovery platform versus the typical biotech. The word platform is used here in the genuine technological sense. Of late, the term "platform" has been used to describe rogue generic drug company Valeant Pharmaceuticals (NYSE:VRX); wherein "platform" is meant as an acquisition vehicle.

Ionis's CEO, Dr. Crooke, calls Ionis's platform the most productive drug discovery platform in biotech. The 10% fall in Ionis shows that investors continue to speculate in the stock without examining Ionis's pipeline or upcoming catalysts.

Clinical Hold

When the FDA has questions on a proposed clinical trial, they can put it on hold until the questions are answered. This happened most recently with Medivation. Medivation acquired a new drug, pidilizumab, that it thought was a PD-1 inhibitor. It turned out that it wasn't a PD-1 inhibitor. Until Medivation figured out what exactly the drug was inhibiting, the FDA had the drug on clinical hold. A few weeks later, the FDA lifted the clinical hold after Medivation understood the drug some more. The FDA placed the clinical hold on January 26, 2016 and removed it on March 9, 2016.

IONIS-TTRRx has been in Phase 3 trials in FAP (Familial Amyloid Polyneuropathy) since February 2013. Today's clinical hold was for a proposed Phase 3 trial of the drug in FAC (Familial Amyloid Cardiomyopathy). Ionis has orphan drug designation for both indications. Both are fatal diseases. Glaxo Smithkline (NYSE:GSK), Ionis's partner for IONIS-TTRRx had been in talks with the FDA on how to setup a Phase 3 trial in FAC.

The FDA has not put the hold on the ongoing 3-year-old Phase 3 trial in FAP. Instead the hold is on the proposed Phase 3 trial in FAC that has not even begun. From the 10% fall in stock price one would think that the drug had killed people in a clinical trial and the FDA wanted to stop the trial.

Most important catalyst

The most important item in the calendar for Ionis investors is the American Academy of Neurology meeting held during April 16-21. Ionis will be revealing more information about its Phase 2 open label Nusinersen study. In an earlier article, I wrote about the miraculous results being shown by this breakthrough drug for the fatal SMA disease. Ionis will also be revealing information about its many other neurological endeavors in various areas such as SCA2, Parkinson's disease, Huntington's disease, DMPK, etc. at the AAN meeting.

Nusinersen has been in Phase 3 trials since 2014, with results expected in the first half of 2017. Ionis cannot talk about those Phase 3 trials because they are blinded. But Ionis is allowed to talk about the Phase 2 open label study. Ionis has been reporting great data for this drug and analysts have been very eager at every opportunity to ask Ionis about early approval for the drug.

Conclusion

Ionis has three drugs in Phase 3 trials (Nusinersen, Volanesorsen, Ionis-TTRRx), all of which report data in the first half of next year. The clinical hold is not on any ongoing clinical trial. Ionis also has many other drugs in Phase 1 and Phase 2 studies. Two breakthroughs in Phase 2 have been covered in a previous article.

This hold by the FDA is negligible in my opinion. An approval for any of the three drugs in Phase 3 trials would make Ionis profitable. An approval would make Ionis snowball financially because it can then retain more of its pipeline for itself instead of partnering.

This clinicaltrials.gov record shows that the FAP Phase 3 trial for Ionis-TTRRx has been going on for three years. The FDA has questions about the proposed Phase 3 trial in a different indication FAC. Ionis says that different FDA departments handle FAP and FAC.

Disclosure:I am/we are long IONS.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.